Oil prices rose more than 2% on Friday, on track for weekly gains of over 8%, as Russia announced plans to reduce oil production next month after the West imposed price caps on the country’s oil and oil products.

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Brent crude futures rose $2.11, or 2.5%, to $86.61 a barrel by 11:15 a.m. EST (1615 GMT). U.S. West Texas Intermediate (WTI) crude futures were up $1.91, or 2.5%, at $79.97.

Brent was on course for a weekly gain of 8.2%, while U.S. crude was on track for an 8.8% rise

Russia plans to reduce its crude oil production in March by 500,000 barrels per day (bpd), or about 5% of output, Deputy Prime Minister Alexander Novak said.

Western nations have imposed restrictions, trying to choke off Russia’s oil revenues in response to the country’s actions in Ukraine. The production cut indicates that the European Union’s recent price cap and ban on Russian oil products, which came into effect on Feb. 5, have had some impact.

”We believe the decision (to cut oil production) is not completely a voluntary one … as market factors likely forced the Russian side to make this decision,” said UBS analyst Giovanni Staunovo.

Russia’s output last year defied predictions of a decline, but its oil sales will prove more difficult in the face of the new sanctions.

OPEC+ plans no action after Russia announced oil output cuts, two OPEC+ delegates told Reuters.

”In the very short-term, (Russia’s output cut) doesn’t mean very much as there’s significant refinery maintenance schedule dampening demand today, but as we go forward and world oil demand continues to recover, it increases the supply deficit,” said Andrew Lipow, president of consultants Lipow Oil Associates.

Economic concerns still pressured prices, with weak demand data from China and recession fears in the United States. Also limiting gains were a rise in weekly U.S. jobless claims and higher oil inventories.

Goldman Sachs lowered its Brent 2023 price forecast to $92 a barrel (bbl) from $98/bbl and its 2024 price forecast to $100/bbl from $105/bbl.

OPEC country officials told Reuters that oil may resume its rally in 2023 as Chinese demand recovers after COVID curbs were scrapped and lack of investment limits growth in supply, with a growing number seeing a possible return to $100 a barrel.

Also read: Russia announces cut in oil production in response to western price cap

(Edited by : Pradeep John)